Key developments in class actions in 2024 and trends to watch for in 2025 from Ashurst
In recent years, the landscape of class actions in the English courts has been marked by significant growth. The year 2024 continued this trend, with various developments that are worth noting as we move into 2025. One of the key aspects to consider is the increased emphasis on the role of funders in class actions.
Third-party funding has become a crucial element of the UK class action scene, providing claimants with the financial means to pursue legal action against well-resourced entities. Without funding, many claimants would not have the resources necessary to take on corporations in court. Moreover, having a funder involved can offer a sense of security for organizations being sued, as it ensures that there are sufficient funds available to cover any potential adverse costs if the claimants are unsuccessful.
However, the actions of 2024 have caused some disruptions in the field of litigation funding, leading to uncertainties about the future attractiveness of UK class actions to funders. One notable event that took place was the delay in addressing the Supreme Court’s ruling in the PACCAR case from July 2023. The decision in this case had significant implications for funding agreements, particularly in opt-out class actions heard in the Competition Appeal Tribunal (CAT). The decision essentially rendered many funding agreements unenforceable, raising concerns within the litigation funding industry.
The previous Conservative government had proposed a bill to reverse the effects of the PACCAR ruling, but this initiative did not materialize due to changes in government following the general election. The Labour government that came into power subsequently decided to await the outcome of the Civil Justice Council’s review of the litigation funding market before taking any further action. This review is expected to be completed in the summer of 2025, following a consultation period that is set to conclude at the end of January 2025.
In the interim, many funders have amended their funding agreements to comply with the current legal landscape. This includes revising the terms of the agreements so that the funder’s return is based on a multiple of the funding provided, rather than a proportion of damages recovered. This adjustment is particularly relevant in class actions before the CAT, where the focus has shifted towards determining an acceptable level for this multiple.
Apart from the domestic review of funding, there have also been discussions at the European level regarding the regulation of third-party litigation funding. The European Law Institute has published a set of principles outlining guidelines for the third-party funding of litigation, aiming to provide a framework for regulating the market internationally. It remains to be seen how these principles will influence future decisions in the UK, but they highlight the ongoing efforts to address issues related to litigation funding.
In light of these developments, it is evident that the landscape of class actions in the UK is evolving, with various factors coming into play that could shape the future of litigation funding and legal proceedings. As we move forward into 2025, it will be essential to monitor these developments closely to understand their impact on the legal landscape and the accessibility of justice for claimants.
